The seventh installment of the Final Fantasy series takes place in a post-modern, steampunk, sci-fi world where high technology reigns and where robots and bio-engineered mutants co-exist with humans and dragons.

Like its predecessors, Final Fantasy VII is a role-playing game in Japanese style, featuring turn-based combat with a real-time (ATB, "active time battle") element against randomly appearing enemies. Customization in the game revolves around a so-called "Materia" system. Instead of magic spells, abilities, and bonus stats being saved to a single character, they are saved to Materia orbs, allowing the player to change a character's spells and abilities from the equipment menu at any time. Materia orbs can be bought in stores or found during exploration. The series' trademark summoned monsters are also contained within specific Materia. Beside experience points, characters also receive ability points that gradually upgrade the abilities of the currently equipped Materia.

Each character also possesses a set of unique attacks called "Limit Breaks". By sustaining enough damage without dying a character will build up their Limit Gauge, which can be expended to do a highly damaging attack when filled. More powerful Limit Breaks are unlocked as previous ones are used, and acquiring the most powerful Limit Break of each character will require completion of sub-quests. 

The game utilizes 3D character models and pre-rendered backgrounds with varying camera angles for exploration of towns and hostile areas. World map navigation and battle screens are done completely in 3D. CG movies are frequently used as cutscenes that advance the game's story. The game features a large amount of mini-games (most of which are optional) and many ways to explore the game world, as the player gradually acquires various vehicles that can venture into previously inaccessible locations.